Why this might be the beginning of the end for the Toyota Prius

This post is in partnership with Money. The article below was originally published at Money.com

By Brad Tuttle, MONEY

When Toyota released its December 2014 results this week, the automaker highlighted how—like most of the industry—sales have been booming. Toyota TM sales in the U.S. jumped 12.7% compared with the previous December, and they were up 6.2% for the year as a whole. The announcement also played up the fact that Lexus had its best sales month ever in December; that sales for trucks, SUVs, and the Sienna minivan were all soaring; and that the Camry held bragging rights as America’s best-selling car, a title it’s owned for 13 years running.

What’s just as interesting about the announcement is the car model that’s notably absent: Toyota Prius. The world’s best-selling and best-known hybrid vehicle, the pioneering Prius, is not mentioned in one Toyota 2014 sales press release and is downplayed in another, with only a quick line stating “we sold more than 200,000 Prius for the third consecutive year.”

Understandably, Toyota is trying to accentuate the positive in 2014 sales, so let’s turn to the auto resource site WardsAuto, which states explicitly that the Prius’s 207,372 units sold represents a 11.5% decrease from 2013. USA Today recently called on another sales data source to report that through the first 11 months of 2014, Prius sales were down nearly 16% compared with the prior year. What’s more, according to the Detroit Free Press, overall sales of gas-electric hybrids like the Prius were on pace to fall 9% for the year.

In 2013, gas-electric hybrids accounted for 3.2% of all light vehicle sales in the U.S. Last year, that figure dipped to just 2.8%. This isn’t remotely the trajectory most experts anticipated. A J.D. Power forecast made in 2008, when hybrids were 2.2% of U.S. car sales, predicted that the category would constitute 7% of the market by 2015.

The plummeting price of gasoline has surely played a big role in hot sales for SUVs and luxury cars on the one hand, and the struggles of the Prius and hybrids on the other. In December, a Businessweek article argued that with $2 gas being commonplace, the Prius is only viewed as a smart financial choice by drivers “who stink at math.” Researchers factored in the upfront costs of the Prius and a similarly equipped gas-powered Chevy Cruze, and then did the math on how long it would take for the pricier Prius to pay off via savings on fuel. The answer was that with $2 gas prices, you’d have to own the Prius for 28 years to break even compared with the overall costs of the Cruze.

But cheap gas is only part of the reason why Prius sales are on the decline. Karl Brauer, senior director of insights for Kelley Blue Book, explained that “the Prius had a good thing going for several years as the ‘official’ vehicle of the environmentally conscious,” a reputation that was solidified during the 2003 Academy Awards, when dozens of celebrities arrived in chauffeur-driven Priuses. The cachet of the Prius has dissipated in the years since because, among other reasons, its fuel efficiency advantage over the competition has shrunk substantially, and Tesla has emerged as the green car of choice that’s not only environmentally friendly, but stylish and a rip-roaring hoot to drive as well.

“A lot of vehicles today get 40+ miles per gallon and you don’t have to make the sacrifices you do with the Prius,” said Brauer, pointing to the fun-to-drive Volkswagen Golf and the surprisingly spacious and practical Honda Fit as appealing, fuel-efficient alternatives to the Prius. “And the Tesla has hurt the Prius as much as anything else.”

What’s especially interesting is that while low gas prices appear to be a factor in declining sales of the Prius and other hybrids, cheap fuel doesn’t seem to be cutting into sales of some purely electric-powered cars, like the Tesla Model S and the Nissan Leaf.

A recent study conducted on the behalf of NACS, a convenience store and retail fuel association, estimates that each 10¢ drop in gas prices correlates to a 1% decrease in consumers who would consider alternative-fuel vehicles. As of November, for instance, 34% of Americans polled said they would be interested in an all-electric vehicle such as the Nissan Leaf, compared with 55% in April, when gas prices were roughly 90¢ per gallon more expensive.

And yet, curiously, while sales of the Prius and other hybrids have suffered hand in hand with falling gas prices, the Nissan Leaf has had a record year. Nissan sold 3,102 Leafs in December and 30,200 Leafs for all of 2014, up from 2,529 and 22,610, respectively, the year before. Likewise, even though the Model S wasn’t new in 2014 and had a high starting price of around $70,000, Tesla sold about as many of the models last year as it did in 2013 when it was the absolute darling of the industry.

One explanation for why sales of pure electric vehicles haven’t slumped like hybrids is that in certain circles EVs are viewed as superior in terms of environmental friendliness and just plain coolness. Then again, it must be pointed out that even as Prius sales decline, it still outsells the Nissan Leaf by a factor of nearly seven.

A 2016 model year Prius is expected to hit the market this year, and Brauer said that, in light of EVs holding the edge in terms of being the green choice, and vastly improved fuel-efficient mainstream vehicles being the smarter economic option in an era of cheap gas, Toyota faces real challenges getting sales back on the upswing. “They have to make the Prius appealing beyond the green car claims,” he said. “The ‘green’ has to be gravy on top of what’s a fun car to own and drive.”

GM plans to launch more diesel cars in the U.S.

The word “diesel” probably elicits one of three reactions from most Americans: A disgusted comment about black smoke, a curious glance that says they don’t know what diesel is, or a story about the time they accidentally put diesel in their engine and worried they’d ruined their car.

All that could be changing, though. Steve Kiefer, the General Motors’ vice president who oversees engine production, said in a speech Tuesday that he thinks 10% of the U.S. market could be made up of diesel cars by 2020, echoing past statements from GM GM executives.

As of right now, only one GM car, the Chevrolet Cruze, is available in the U.S. with a diesel engine. Some heavy-duty pickups are also available with diesel as an option. Several more could be coming in 2016, according to a report on Automotive News. The Chevrolet Colorado and the GMC Canyon will be available with diesel engines in 2016.

The Chevrolet Cruze diesel will be the first of many diesel-powered passenger cars General Motors will offer in the United States, Kiefer said in his speech.

Lauren Fix, an automotive columnist who goes by the title “The Car Coach,” said she agrees, and that diesel’s image is changing stateside.

“Diesel today is about performance,” she said. “Its a great alternative to a hybrid, because what you lose with a hybrid is towing capacity.”

Diesel cars are tremendously popular in Europe, especially among German manufacturers. For several years, more than 50% of new cars sold in Europe have been diesel engines, according to data from the European Automobile Manufacturers Association.

IHS analyst Jeff Jowett thinks that Kiefer and Fix might be right, but that “a lot of stars would have to align” for the 10% number to actually be reached. Price of fuel is still a concern for some consumers, with diesel still costing between 40 and 50 cents more per gallon than gasoline.

Part of the reason people buy hybrids cars, of course, is because they want to “go green.” While diesel may not be quite as clean as a hybrid, Fix notes that the tailpipe emissions from diesel cars are less harmful to the environment that from gasoline cars. She also says there is at least one environmental concern with hybrids that isn’t often discussed: What happens to the batteries when they die?

“At some point [the battery is] going to be depleted,” she said. “What are you going to do with it? There’s no systems as we speak right now that fully break down batteries without having hazardous waste.”

Besides being environmentally conscious, there’s another reason people like hybrids: The gas mileage and the money saved by fewer trips to the pump. On this, Fix says, diesel cars might even have hybrids beat.

In a road test, the Audi A3 got 52 miles to the gallon, for example. She said she could drive her Porsche Cayenne with a diesel engine on a round trip between New York City and Buffalo — a total of about 800 miles — on more or less one tank of diesel. A gasoline car would need to be refueled.

Jowett said that diesel cars and hybrids should actually compliment each other, not compete.

“If your commute is from one side of New York City to the other, you belong in a hybrid,” he said. “If your commute is 40-50 miles on the interstate, you belong in a diesel.”

So, if everyone in Europe loves them, they’re more environmentally friendly, sufficiently powerful and get good mileage, why are diesel engines just now catching on stateside? It comes down mostly to branding and perception.

“[Americans] know diesel as ‘Oh my gosh, those are like school busses!'” Fix said. People in their 40s and 50s are just too set in their ways and are unlikely to buy diesel. Jowett called this an “overplayed excuse,” but acknowledged that “there is some truth to it.”

Part of the problem, Jowett said, is that most of the newer, smaller diesel cars are so quiet and smooth that people don’t even know they’re diesel, leaving stereotypes of black smoke and pickups.

“What we still struggle with in this country is the vast amount of pickup truck diesels that are still out there,” he said. “When you mention diesel, I’m afraid that’s what a lot of American consumers think about.”